Globalization, Financial Risk, and Environmental Degradation in China: The Role of Human Capital and Renewable Energy Use

Amid rising climate concerns, understanding how renewable energy adoption, human capital, fossil fuel efficiency, and globalization collectively shape CO2 emissions is crucial for unlocking pathways to a cleaner, resilient, and globally connected low-carbon future. Using China as a case study, this research investigates the drivers of CO2 emissions, focusing on fossil fuel efficiency, renewable energy adoption, and globalization, utilizing quarterly data from 1984Q1 to 2023Q4. To ensure robust and nuanced insights, the study integrates advanced machine learning techniques alongside Quantile-on-Quantile Kernel Regularized Least Squares (QQ-KRLS) and a Modified Quantile Regression as robustness checks, capturing complex distributional dynamics often overlooked in conventional analyses. To the authors’ knowledge, this is the first empirical study examining such relationships for the case of China. The results reveal that globalization, fossil fuel efficiency, renewable energy, human capital, and financial risk all contribute to increasing CO2 emissions. The study proposes precise policies based on the findings obtained.